Why Service Quality Alone Does Not Open the Tap on Rate Hikes: Assessing the Determinants of Willingness to Pay for Drinking Water Infrastructure

Negative experiences with water services can shape perceptions that municipal drinking water is unsafe and foster dissatisfaction with providers. Though prior research links such experiences to lower trust in municipal governments, less is known about how trust influences households’ willingness to pay (WTP) for service improvements. This relationship is critical, as municipal utilities rely heavily on ratepayer revenue and household support for operational sustainability and infrastructure investments. This paper examines the determinants of households’ WTP for improved drinking water quality and infrastructure across the United States using three years of data from the national Value of Water survey. Employing a structural equation modeling framework, we model the interrelationships between consumers’ perceived service quality, satisfaction, trust, and demographics. Findings suggest that service quality increases satisfaction through trust, and that satisfaction serves as a key channel linking household experiences to financial support for utility investments.